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Wednesday, September 10, 2014

RXi Provides Disappointing Clinical Update for Scarring Drug

At the Rodman & Renshaw investor conference today, the CEO of RXiPharmaceuticals dropped a little bombshell in the form of a disappointing clinical update on their lead clinical
candidate, RXI-109 for the treatment or prevention of dermal scarring. In that interim look for efficacy, RXI-109 and placebo were not really distinguishable in scar severity sending the stock down 30-40% in the middle of today’s
trading session.

1301 study design

The 1301 study is the first of three phase IIa studies
evaluating 109 in a number of different scar settings. In this case, RXI-109 was administered
following scar revision surgery on the lower abdomen. Part of the same scar received either 3 injections
of the self-delivering RNAi compound, another part placebo solution. Half of the subjects (50% of the study/16
subjects have enrolled as of today), received 109 on days 1, 8, and 15 following surgery
(cohort 1), the other half received injections on days 14, 21, and 28 following
surgery, the latter apparently inspired by clinical design trends observed for competitor antisense drug from Pfizer/Excaliard.

I find that blindly adjusting
your clinical design based on such competitive intelligence is a worrisome sign of lack of confidence.

1301 study results

The first interim look for efficacy took place at 1 month
post-surgery. Results were based on the
blinded visual assessment of scar severity on a scale from 1 (good fine-line
scar) to 10 (worst scar imaginable).

Unfortunately, the close to 50% knockdown of target CTGF observed in a similar 3-dose phase I study, did not translate to an obvious improvement in
scar severity: for the immediate treatment group, the VAS score was 2.0 for
both the 109 and the placebo side of the scar; for the delayed treatment group,
the VAS score was slightly better in the 109 side (2.0) than on the placebo
side (2.5) even reaching statistical significance.

Before you get excited and buy into the biological
rationalizations by the CEO for why it makes sense that delayed, but not
immediate would exhibit such a benefit, note that a VAS difference of 0.5 on a scale from 1 to 10 would appear
to be clinically meaningless despite the statistical significance. Moreover, looking at the VAS scores across
the board, it seems that the placebo side in the delayed treatment cohort is a
statistical outlier as it should not have performed any different than the
placebo cohort in the immediate treatment group.

On the other hand, given that the scars have not had time to
fully develop and the VAS scores were still so low, it is possible that real
differences will emerge at later time-points such as month 3 when the next
interim look will take place and it may thus be premature to declare the study or drug for that matter a failure.

RXi needs a plan B and investors patience

In light of the disappointing trial update, it may not be a
coincidence that Geert Cauwenbergh today took the opportunity to talk more
about their other, preclinical pipeline candidates in the dermatology and
ophthalmology space in much more detail than had been the case.

I am less excited about the prospect of RXi expanding their
dermatology footprint given the relatively modest gene knockdowns observed, limited tissue penetration from the site of injeciton, and
the cosmeceutical nature of their current line-up (acne, depigmentation
etc). By contrast, I am much more excited about the prospect and value of self-delivering RNAi triggers
in the ophthalmology space given the great unmet medical needs there and the
highly encouraging tissue penetration/biodistribution data for self-delivering
RNAi in that organ.

There will be more to talk about that in the future. As stock market investors, however, one has
got to wonder whether management is aware of that value and knows how to best exploit
it (pro tip: VEGF is a no-no for RNAi in the eye). Even more concerning is the fact that the majority
shareholder (Tang Capital) still holds close to half of the company and is in the
process of unloading it thereby putting constant pressure on the stock. And with
only $10M in the bank, you know what the trip to the Rodman & Renshaw
conference was all about.

So no more than a small starter position for me despite the
steep sell-off today.

No Rxi Pharmaceuticals (RXII) uses an sd-rxRNA technology platform. That is it combines RNAi together with antisense technologies but as a hybrid compound that can be delivered locally to tissue, skin, eyes. More testing in a systemic setting will need to be done if it is to have any effect on systemic diseases.

To comment on the article itself I think management though they had to report the early results because of SEC rules they can't withhold material information from shareholders. But yes releasing it didn't help as efficacy can't be seen because of 1-month post surgery. That doesn't give the hypertrophic scar on the placebo side enough time to grow back. The 3 month results should be better as RXI-109 should remain with a VAS score of 2 or lower, and then the hypertrophic scar using placebo should be nearly full grown back to pre-surgery levels. At that point in time the difference between RXI-109 and placebo should be statistically significant by a larger margin. We will just have to await those results to see that effect.

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